Intercultural Communication: The Hofstede Model
One of the most widely used frameworks for analyzing cultural differences is the model developed by the eminent cultural theorist, Geert Hofstede. In this model, the differences in culture between countries have been plotted along five dimensions, which can be used as the basis for predicting the cultural differences between different countries. The model was […]
Popular Theories of Organizational Communication
Introduction to Organizational Communication Organizational communication as a field has grown immensely in scope and depth over the last few decades. Concomitant with the rise of the corporation and the managerial way of doing business, it has become the norm for management theorists to define how, what and why an organization should be the way […]
Leadership and Trust
Trust seems to be the key trait linked with leadership. A leader cannot lead if his followers do not trust him. A leader discovers the employees’/followers problems and tries to solve them, but it is the trust that his followers hold on him which tells whether the leaders retrieve the knowledge and intellectuality required to […]
Role of HR Consulting in Redesigning Organizational Structure
Organizational structure is the driving force behind the performance and growth of the organization. For an organization to achieve success and competitive advantage, it is highly important that there should be complete alignment between the organizational structure and the strategic goals of the organization. A properly coordinated organizational structure improves the flow of information and […]
Strategies for Organization Diversity
Let us go through few strategies for organizational diversity: Treat all individuals equally irrespective of their designation, back ground, community and religion. It hardly matters to the organization whether the individual concerned is a Christian, Muslim, Hindu or a Sikh. What matters is his willingness to learn and passion to perform. Rules and regulations ought […]
The CAS committee on Enterprise risk management has given the following definition of the same - ‘The discipline by which any organization in any industry assesses, controls, exploits, finances and monitors risk from all the sources for the purpose of increasing organizations short-term and long-term value to its stakeholders’.
In simpler terms enterprise risk management includes all the tools and processes employed by an organization to manage and control risks and grab more opportunities in the market place. It provides a framework for better risk management.
Enterprise risk management starts with identification of events that are of relevance to the organization, the risks and opportunities. These events are evaluated on the basis of their impact and probability of occurrence and a strategy is designed to counter or meet the same; all this to add more value to stakeholders.
It is an approach where in risk is looked upon as an opportunity and at the same time is monitored such that it may not affect an organization to a large extent.
Typically the following four strategies, called as ‘risk response strategy’ are adopted by organizations while facing a risk.
Conceptual Framework: ERM in the table below has been conceptualized in two dimensions, one showing the types of risk and other the various risk management process steps.
| ERM Framework | ||||
| Process Steps | Types of Risk | |||
| Hazard | Financial | Operational | Strategic | |
| Establish Context | ||||
| Identify Risks | ||||
| Analyze/Quantify Risks | ||||
| Integrate Risks | ||||
| Assess/Prioritize Risks | ||||
| Treat Risk | ||||
| Monitor and Review | ||||
A brief explanation of the various kinds of risk is as follows:
Hazard Risk: Natural disasters, liability damages, Property damages due to fire, tornado etc, injury or illness to its employees.
Financial Risk: Risks like foreign exchange risk, commodity risk, pricing risk, asset risk, liquidity risk.
Operational Risk: labor relations, customer satisfaction, product failure etc.
Strategic Risk: Competition, fluctuation in demand and market price, regulatory and political trends, social trend, capital availability.
The other dimension of the table carries the steps of entire risk management process. The process starts from an understanding the conditions in which organization operates (Establishing context). In the next stage various threats are identified (Identifying threats) proceeded by analysis of risks.
The risks are then integrated and prioritized. In the penultimate stage strategies are designed for controlling risks (Treat Risk). Finally, the risk environment is continually monitored and the strategies are evaluated.
Organizations have various departments and functions that identify, manage and deal with different risks. These risk functions or departments vary in capability and coordinates in a unique fashion with other functions. The entire task of enterprise risk management revolves around improving or enhancing this coordination. Finally stakeholders need a cohesive picture which is provided as the output of enterprise risk management. ERM thus, enables and improvises organization’s ability to deal with risks better.
Your email address will not be published. Required fields are marked *
